NextBillion.net - Development Through Enterprise - Microfinance and MicroFranchises: A Perfect Marriage? - Comments

Notes for Microfranchise Learning Lab posted

John Paul — Fri, 27 Jan 2006 17:15:28 -0500

The notes from the Microfranchise Learning Lab have been posted and are available at here.

Microfinance and MicroFranchises

_Graham Douglas — Tue, 10 Jan 2006 00:24:28 -0500

Thank you for this very informative and stimulating piece on Microfinance and MicroFranchising and in particular the considerable contribution made by Kirk Magleby: MicroFranchises as a Solution to Global Poverty. While I agree the MicroFranchising approach has much to offer ( I would like to see the microfranchising of training in Integrative Improvement™ tools) there will still be a great need for systemic improvements in individual and organisational integrity, planning and governance in business, government and civil society organisations. If this is not done urgently franchisees will continue to suffer from the shortcomings of the franchisors’ planning and governance and the possibly poor investment climate in their country. Also, increasing the numbers of microfranchisees may not be as efficacious in alleviating poverty as is hoped. They could well remain at the “bottom of the pyramid” if we continue with a top-down approach to development, particularly if the top part is foreign-owned and franchises are mostly of fragments or derivatives of the existing methods, goods and services of industrialised economies, which tend to be unsustainable. Moreover, franchises are not likely to find favour with all sectors in the economy and all people. For instance, according to a 2004 study provided by STAT-USA (http://www.stat-usa.gov/) “The Franchise sector in Australia is both large and mature. There are 700 franchise systems and close to 50,000 franchised outlets in Australia employing over 478,000 people. Australia has more franchising outlets per capita in the world and three times more per capita than in the U.S.” For comparison, the population of Australia is about 20+ million. May I suggest an integrative approach incorporating the thinking of Lodge and Wilson and all relevant tools such as microfranchising is needed. Also, may I suggest the venue for quickly formulating this integrative approach is the Commission on the Private Sector & Development at http://www.undp.org/cpsd/background/index.html . Graham Douglas Integrative Federation™ www.integrative-thinking.com

Microfinance and MicroFranchises: A Perfect Marriage?

John Paul — Mon, 09 Jan 2006 19:03:41 -0500

Microfinance: Very small loans provided to the poor to provide capital for starting a very small business.

MicroFranchise: A small business that can easily be replicated by following proven mentoring, marketing, and operational concepts found in formal franchises.

Put them together, and you have an easy way to promote economic development: by creating sound replicable business models that can be financed and managed easily by entrepreneurs at the base of the pyramid. This was one of the ideas put forward last Friday at a MicroFranchise Learning Lab presented by BYU’s Center for Economic Self Reliance.

Microcredit is a proven poverty reduction tool, providing the necessary capital for entrepreneurs to start their own businesses and lift themselves out of poverty. But not all people are entrepreneurial. And not all entrepreneurs have the necessary training and skills development to start and manage a successful business. That’s where microfranchising adds value - as a ‘turn-key’ business, a microfranchise can rely on the franchisor, who reduces the risk of failure by providing high quality initial and ongoing training.